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Proposed changes mean that employees would need to be employed for a full two years before they are entitled to claim unfair dismissal (currently this is one year).

At present employers cannot dismiss a permanent staff member without following a strict process; failure to do so without good reason could lead to a successful claim for unfair dismissal.

The government is also consulting on the issue of ‘protected conversations’; they would like employers to have frank conversations with employees about performance or on-going employment issues without fearing what they say will be used against them in an unfair dismissal claim.

They are also proposing that prior to employment tribunal, complaints would be referred to the conciliation service ACAS.

Further reforms could see changes to the rules on employment tribunals, including whether a deposit should be paid before bringing a claim and whether employees should also pay further costs.

Redundancy proposals are also under review; currently for large-scale redundancies employers have to give 90 days consultation, this could be reduced to 30 days.

The government is also expected to announce proposals from Beecroft’s recommendation on ‘micro-companies’ or those employing fewer than 10 staff, may be exempted from employment regulation.

Another highly controversial part of the report is on Compensated No Fault Dismissal, which would allow employers to sack unproductive staff with basic redundancy pay and notice.

Commenting on the proposals John Longworth, director general at the British Chamber of Commerce said: “Too many companies, particularly small and medium-sized businesses, tell us that dismissal rules and the fear of costly tribunal claims stop them from taking on staff. :Over 70 per cent of firms see dismissal rules as burdensome to their business…this new route will being confidence to employers, and boost productivity in the workplace, which is good for employers, employees, and the economy.”

In support Simon Walker, director general at the Institute of Directors said: “The IoD strongly supports radical change to employee dismissal processes and fully backs Compensated No Fault Dismissal as part of a solution. Ministers would do well to act upon Mr Beecroft’s suggestions, freeing up wasted time and money from litigation and ensuring it is instead channelled into job creation and business growth.”

Naturally not everyone is in favour, Brendan Barber, TUC general secretary said: “Reducing protection for people at work will not save or create a single job. It’s not employment laws holding firms back, it’s the tough economic climate and the problems many companies are having getting the banks to lend to them that’s to blame.”

He also added “Research from the OECD shows that there is no link between regulation and economic output – German employees have much more protection at work and their economy is the strongest in Europe.”

Philip Landau, employment lawyer at Landau Zeffertt Weir said: “The ‘underperformance argument’ is often unfairly levied against employees: for example, where individuals are singled out against a backdrop of similar underperformance by others; where employees are unreasonably overworked and set unrealistic targets; and where employers provide insufficient training, support or resources.

In other cases there are personality clashes between line managers and their staff, which, in turn, can often lead to unjust underperformance allegations.”